One of the dates you should have marked in your calendar this year was 1st April. On this day, the National Minimum Wage and National Living Wage rates rose, imposing additional costs on your business, which you will need to factor into your financial planning to ensure your cash flow remains stable. Turner Little explains the National Minimum and Living Wage changes.
Spotlight on wages
The National Living Wage and the National Minimum Wage are different salary systems. The National Minimum Wage is an umbrella term, for the lowest rate you can pay staff, per hour. The National Living Wage was recently introduced, and is now the minimum wage for UK employees aged over 25.
The implementation of the National Living Wage increased the amount of pay that staff who fall into the lowest wage bracket earn. It has already, business experts argue, led to higher unemployment, as it forces business to up their outgoings, so some small companies have had to let staff go, to cut costs.
Crucial changes
The National Living Wage increased on 1st April 2017, potentially raising outgoings for your business. You were previously required to pay all personnel aged over 25 at a rate of £7.20 per hour, under the National Living Wage, but you will now have to pay them £7.50, so it has been raised by 30p.
Meanwhile you are required, under UK law, to pay the National Minimum Wage to any staff you hire at your company, who are aged between 21 and 24. As of 1st April 2017, it is now £7.05 per hour. Meanwhile, you should be aware that there are new wage rates for younger employees as well…
- Apprentices will now earn £3.50 per hour.
- Workers aged between 16 and 17 years old will now earn £4.05 per hour.
- Employees aged between 18 and 20 years old will now earn £5.60 per hour.
Commenting on the new National Minimum Wage and National Living Wage rates, the UK’s Business Minister, Margot James, said: “The government is committed to creating an economy that works for everyone and today’s rate rises are great news for some of the UK’s lowest paid workers. More than two million workers will receive an above inflation step up in pay, with some set for a £600-a-year pay rise.”
Handle your finances
It is important that you understand the distinction between the National Living Wage and the National Minimum Wage, so you can comply with the new rates, which is your duty under UK law. It is hard to deny, however, that these rises, whether for the Living or Minimum Wage, will impose new costs on your business, and you need to find a way to save money, so you can maintain a decent cash flow.
One area that you might want to look at is your business banking. If you switch account providers, you could benefit from a more cost effective service, as well as add-ons such as gadgets insurance. It is key that you seek expert aid when changing your business bank account, to ensure you get the right deal, and we can help you out. Turner Little can supply you with the business banking advice you need to keep your firm’s finances stable, even with the new wages, so you have the capital needed to thrive.
Turner Little
Turner Little was founded in 1998 and it has since become a well-established UK based professional Company Registration Agent, Registered Bank Intermediaries and Business Consultants, as well as Trust provider. You can receive our monthly newsletter by signing up using the form below.